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Two Smoking Guns and a Cold Case

The copyright war just isn’t dramatic enough to warrant a good novel, let alone a big movie deal.

Consider a few recent stories from the on-going battle between content owners and consumers:

In October, sources reported to CNET’s Greg Sandoval that part of the document exchange between Viacom and YouTube in the on-going $1.1 billion infringement case revealed evidence that YouTube management knew about rampant uploading of copyrighted film and TV clips. Worse, the source indicated that there was also evidence that YouTube employees were among those uploading unauthorized material. (A YouTube spokesman responded that Sandoval’s characterizations were “wrong, misleading, or lack important context.”)

In the Wolverine case, Sandoval reported a few days later that the man accused of uploading the stolen film, Gilberto Sanchez, had purchased a DVD “from a Korean guy on the street for five bucks. Then I uploaded it.” In other words, Sanchez apparently has nothing to do with the real crime—that is, whoever inside the industry managed to steal the pre-release version of the film and put it in circulation in the first place. The real case may have gone cold.

And Viacom’s potential smoking gun was greatly undermined yesterday when it was revealed the company asked the judge in the case for permission to remove 250 of its claims of infringement. Why? Well, at least 100 of the removed claims involved clips that had been intentionally uploaded to YouTube by Viacom employees. It turns out that Viacom and other content owners regularly used and continue to use YouTube to promote their programming by uploading clips and hoping they go viral. (According to a YouTube lawyer who attended last month’s Supernova conference in San Francisco, those uploads are often done anonymously to mask the fact that the clip is a marketing effort.)

Make no mistake. Sanchez’s uploading of the bootleg DVD of the movie still constitutes a copyright infringement. And just because the owner of a copyright, in Viacom’s case, decides to license some of its content without receiving any royalties doesn’t in any way negate its right to pursue third parties who do the same thing without permission.

But the two stories underline that the problems of copyright in the digital age are much more complicated than the battle of good vs. evil Hollywood portrays. Content owners continue to hide behind the rhetoric of “pirates” and “stealing,” arguing that every file share or on-line viewing, no matter how poor the quality, represents precisely one less customer paying full retail price.

The reality, clearly, is something very different. The Wolverine movie viewed 4.1 million times was an unfinished copy, missing special effects and other elements (I didn’t see either). It seems likely that some, perhaps most of those who watched the unfinished movie before it was released later saw the finished film in an authorized format. It also seems likely that some who saw the unfinished movie wouldn’t have seen the real thing in any case, or were moved to see the real thing by what they saw in the pre-release. (Think of it as a full-length trailer.)

Likewise, many who watched unauthorized YouTube clips of Viacom content may have already seen authorized versions of the same content and wanted to see it again without fussing with their DVRs or waiting for reruns, or may have been inspired by seeing a clip to start watching the program regularly. Clearly Viacom’s marketing department thinks so, or they wouldn’t have put up at least 100,000 clips themselves.

I say “seems likely” because there’s no data to support these claims, or at best very incomplete data. But there’s equally poor data to support the extreme view of copyright damages—that every unauthorized view is cash money out of the pocket of the content owner.

Copyright infringement in the digital age, in other words, isn't about piracy and theft. These cases are really about control over markets, many of which are new and emerging. Their dynamics are still mysterious. (Why does Viacom believe that an anonymous authorized post of a clip generate better buzz, for example, than an identified authorized post?)

Content owners shouldn’t be allowed to pursue damages—as courts often allow today and as Viacom is claiming in the YouTube case—on the theory that unauthorized uses are always destructive and always completely so. That is, that unauthorized uses never help sales and indeed translate to fully-marked up losses.

Rather than thieves and pirates, we ought to be talking about productive and destructive uses of content. A productive use, as I write in The Laws of Disruption, is one that adds more value to the underlying information than it takes away. A destructive use has the opposite effect.

Media companies needn’t be so apocalyptic in their rhetoric if not their strategy when it comes to unauthorized uses, especially those (like clips and short excerpts) that inherently promote their products.

Giving up some measure of control is hard for these companies, because they believe in a binary world in which one either controls one’s content or loses everything. I’m not sure that binary world ever existed, but in digital life it clearly doesn’t.

Indeed, in the Olden Days, the law used to recognize that copyright holders couldn’t always be trusted to license content to maximize their own best interests. The law used to allow for short excerpts, quotes, and clips to be reproduced without permission, in the form of reviews, commentaries and parodies.

The old law was called “fair use.” It made a lot of sense, but content owners have managed to use the courts and Congress to rob it of any real meaning.